Staffing costs, needs crunching city operations

A dramatic savings on interest payments will offset rising salary costs at Fort St. John city hall in 2019. But the city’s budget architect warns it’s a one-time savings that won’t address future staffing costs as workload pressures continue to mount beyond 2020.

David Joy, the city’s general manager of corporate services, presented a balanced, $59.2-million operating budget to council on Monday, January 7, one that holds the line on tax rates amid stagnant property assessments and continues to cut discretionary spending.

The city is forecasted to collect $32.3 million in property taxes this year, up roughly 2% due to an increase in assessments for commercial and light industrial properties, which offset a drop in residential assessments. The city will collect the rest of its budget revenues through grants, the sale of services, investments, and transfers.

The city will see savings up to $815,000 this year on its interest and bank charges as some of 20-year loans saw rate adjustments. It’s enough to offset a $750,000 increase in salaries and benefits, up 3% to $24.5 million this year due to pay raises for unionized workers, increased overtime costs, and an increase in benefit premiums.

Without the savings, the city would be facing a deficit budget proposing a tax rate increase of at least 3% to make it balance, Joy said.

“Next year, we won’t have that,” Joy said. “What that’s done for us in 2019 is basically pay for salaries, wages, and employee benefits, all else taken into consideration.”

The city has also trimmed another $226,000 in discretionary spending for 2019, bringing the total amount of cuts over the last two years to nearly $1 million in the face of inflation, Joy said. Without the cuts, the city would need to raise tax rates another 3 to 4%, Joy said.

The city is projecting a $225,000 drop in revenues from services provided to other governments, due to the outsourcing of 9-1-1 dispatching services to Vancouver Island. It expects to collect less in pool subsidies and recreation fees as user numbers are down, along with a drop in other revenues from sponsorships due to uncertainty over the economy.

The average single-family homeowner will pay $20 less in taxes in 2019, if tax rates are held, a decision that will be made later this spring.

There are staffing pressures facing all city departments, Joy said, noting in his presentation that at least a dozen positions are needed, from the RCMP to recreation, bylaw enforcement to planning and public works.

While tax revenues have remained largely the same over the last three years, workloads have increased, Joy said. The city’s staffing formula is tied to property assessment values, regardless of its growth in land, roads, and other infrastructure.

Since 2014, the city has added more than 1,100 new residential units, however, property values are now back to 2013 levels, Joy said. On top of that, assessments for major industrial business such as Lousiana Pacific and Canfor have dropped 17% below 2014 levels and are continuing to drop, shifting the tax burden to residents and other businesses.

“We’ve experienced a decline or marginal assessment growth for 2018 and 2019, and almost all departments are experiencing more pronounced staffing strain," Joy said.

“We can always just get by and defer for so long, but there’s considerable strain to fulfill the strategic goals, objectives, and tactical strategies” of the city.

The staffing formula will be scrutinized as part of a new financial review this year, along with the city’s policies on managing its reserves and surpluses, grant monies, debt capacity, tax exemptions, and tax rates.

The city is carrying roughly $30 million in long-term debt, about a third of that for the Pomeroy Sport Centre. The rest is self-funded through utilities and local improvement levies, which leaves the city in a flexible position for its future borrowing needs, which will include the new RCMP detachment and a new multi-use recreational facility.

The city is also the second-highest provider of permissive tax exemptions in B.C., exempting more than $1 million in taxes to churches and other groups in 2018.

“There isn’t one decision that council makes that sets a direction for your budget. It’s a lot of decisions you’ve made along the way,” City Manager Dianne Hunter said.

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